The average monthly new-vehicle payment fell in February due to a mix of factors driving down the cost of ownership, though affordability remained worse than a year earlier and still well above what the typical U.S. household can afford.

The estimated average monthly payment was at its lowest since October, falling about 2% month-over-month to $765 after peaking in December at $789, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.

Consequently, the estimated weeks of median income needed to buy the average new model dropped from 44.2 in January to 43.2, still up 7% year-over-year.

Cox credited not just lower vehicle prices but also more incentives, growing consumer incomes, and a lowered average loan rate, for increased affordability.

The median income increased slightly by 0.3%, while Kelley Blue Book data show manufacturer incentives also increased and the average new-vehicle transaction price fell 1.4%. Meanwhile, the average new-vehicle loan interest rate fell to 9.2%.

Despite the affordability improvements, Cox Chief Economist Jonathan Smoke said the typical U.S. household can afford just $400 worth of vehicle loan payment per month.

“With an average monthly payment of nearly twice that,” he said, “the new-vehicle market remains heavily skewed toward the most affluent buyers.”

A year earlier, incentives were more plentiful and new-car prices and loan rates lower, as the Federal Reserve has since raised borrowing rates multiple times.

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